Controversy in Chile: ministers withdrew advances on their pension funds despite public opposition to the law that allowed them

A new controversy has erupted within the Chilean government after of senior officials admit to having withdrawn funds from their AFP despite its public opposition to this policy.

Since the start of the pandemic in 2020, Chile has approved three exceptional withdrawals of money from pension fund insurers (AFP) due to the health and economic crisis. The first of these took place on July 30, 2020, the second from December 10, 2020 and the third came into force on April 28, 2021.

Withdrawals were made via the internet without the need to resort to an agency, and by entering only the personal data of each affiliate. Only 10% of the funds could be extracted with each withdrawal and the Chilean government has always opposed these measures.

The scandal started after Rodrigo Cerda, The Chilean Minister of Finance admitted to having used the first withdrawal of AFP funds. The revelation fell like a bomb on national politics because this authority is currently one of the main opponents of this policy.

The minister explained to RadioBioBío that “at the time i was not in government and i was able to do so. One thought is that this was a completely transitional policy. But later, when we realize that when more things start to happen you worry about your own pension funds”.

Although having made the first withdrawal of AFPs Minister Cerda reiterated his position against this policy, pointing to the draft fourth withdrawal currently under consideration in Parliament. According to him, this initiative could lead to a decrease in pensions. “Among people who have made three withdrawals, their pensions will drop by 40% ”, Cerda.

A few hours after this revelation, a second government authority admitted to having made one of the withdrawals. This was the case of the Minister of the Environment Carolina Schmidt who affirmed that “I – like everyone else – my money in the AFP. I made a withdrawal “and that” I did it because I needed an emergency “.

Schmidt took the opportunity to reject a fourth withdrawal of AFP funds because it is “bad public policy”.

“What we are doing today is generating inflation that ends up eating the money of those who need it most.Schmidt said, adding that these withdrawals were included “when there was a health and economic emergency”.

Other authorities involved

After these two authorities revealed that they had used their funds with the AFP, little by little other government officials admitted to having done so. This was the case with former Under-Secretary for Crime Prevention Katherine Martorell who currently integrates the command of the right-wing presidential candidate Sebastián Sichel.

Martorell explained that he took advantage of a retirement because there was a “family situation”. “I made a withdrawal of 10%, only one and I did it for a family situation, a family illness,” said the former undersecretary.

The former undersecretary added that she thinks it is a “bad sign” to talk about withdrawals if it is not first discussed how to return these resources to the people. “It seems to me, I insist, the wrong sign to talk about withdrawals versus the importance of talking about how we are going to return funds to people and how we are going to give them decent pensions,” Martorell said.

Another Chilean politician who admitted the use of these withdrawals was former Defense Minister Mario Desbordes. The former presidential candidate explained that he made the second and third withdrawals because “I have to pay for things”.

“He finished elementary school and I returned to my law firm. I am full of good prospects but during those two months the income is of course not what you would expect. I just made two withdrawals, the second and the third. And I did it because I have to pay for things. A lot of people may be living my reality, ”said the former MP.

At present, the plan for the fourth withdrawal of AFP funds has been sent by the Constitutional Commission. and it is expected that this Tuesday, September 28, it will be discussed by the plenary session of deputies.

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